Prepare Journal entries necessary to record the activity below for the month of August. There was no prior activity.
1. Owners invested $100,000 cash into the company.
2. The firm borrowed $25,000 for working capital purposes; a short term note was signed.
3. A building was purchased for $175,000 with $25,000 cash and 150, 000 long term mortgage loan
4. Equipment (fixed assets) was purchased for $15,000
5. Bulk paper supplies-prepaid supplies -(copy paper, letterhead, envelopes, etc) were purchased for $2,500 with cash.
6. Inventory purchases of $18,500 were acquired on account .
7. Inventory that cost $7,500 was sold to customers for $16,000 cash.
8. Additional inventory of $9,000 was purchased; cash of $4,500 was paid and the balance is due in 30 days
9. It was determined that $900 of the supplies previously purchased was used in the normal course of business for the month of August
10. Inventory that cost $6,000 was sold to a customer for 14,500 on account
11. Cash of $6,000 was received from customers that had previously purchased items on credit.
12. Interest expense of $1,300 needs to be accrued on August 31st
13. Marketing expenses of $1,100 were incurred, though not paid in August
14. Printing expense of $900 for the month of August was due at the end of the month but has not been paid
15. Employee wages of $3,000 for the last week of August were not yet paid
16. Insurance for the month of August amounting to $700 was paid on August 30th.
17. Depreciation of $2,000 needs to be recorded at the end of the month. ( Consider this the total depreciation, no need to delineate between the building and equipment.)
18. Internet/phone expenses of $600 were incurred, though not paid in August.